The Cabinet on Thursday approved charging for excess spectrum beyond 4.4 MHz held by the incumbent telecom service providers. The government expects to net about Rs. 31,000 crore from this move.

The Cabinet also approved sharing of spectrum
by the telecom service providers and allotting 2G spectrum for Delhi circle to Tata Teleservices.

Earlier, the telecom licences were awarded along with a start-up spectrum of 4.4 Mhz. The incumbent operators were awarded spectrum beyond 4.4 Mhz without charging one-time fee.

Out of Rs. 31,000 crore, Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd have to pay close to about Rs. 12,000 crore. It is highly unlikely that the two loss-making PSUs will pay any one-time spectrum fee to the government.

Out of the balance Rs. 19,000 crore, the government would get only about Rs. 6,000 crore during the financial year as the Cabinet has given an option of staggered payment.

Companies that will be impacted due to the decision are Bharti Airtel, Vodafone, RCOM, and Idea.

The Cabinet decision, however, will not have any immediate impact on the tariffs as there are about seven to eight service providers in an area and the excess spectrum is held by only three to four of them.

The Cellular operators association of India (COAI) claimed that the it will increase tariff as the industry will pass on the burden to customers. But the Cabinet approval on sharing of spectrum will help operators as it will reduce their cost.